CFPB finalizes effective date extension for prepaid accounts rule

On Jan. 25, 2018, we issued a rule making some changes to the prepaid rule and extending the effective date to April 1, 2019. Read more about it in our press release.

Today, we released a final rule delaying the general effective date of our rule governing prepaid accounts by six months. The rule will now take effect on April 1, 2018. We have also decided to revisit at least two substantive issues in the prepaid accounts rule through a separate notice and comment rulemaking process. We expect to release that proposal in the coming weeks.

Effective date

In March, we proposed a six-month delay to the general effective date of the prepaid accounts rule based on feedback we received through our efforts to support industry implementation. We had learned that some industry participants believed they would have difficulty complying with certain aspects of the rule by the original Oct. 1, 2017 effective date while also ensuring continued availability of their prepaid products and with minimal disruption to consumers.

In response to our proposal, we received comments from a range of stakeholders, including consumer advocacy groups; national and regional trade associations; members of the prepaid industry, including issuing banks and credit unions, program managers, and a digital wallet provider; several think tanks; an association of state financial regulators; a group of state attorneys general; and others in the public.

After reviewing those comments, we decided to finalize a six-month delay to the effective date. We continue to believe that a six-month delay—when added to the nearly 12 months previously provided for in the prepaid accounts rule—allows sufficient time for industry to implement the rule. It also provides for an appropriate balance between the interests of the consumers who will receive the benefits of the rule and the needs of industry for an adequate implementation period.

Substantive rulemaking

We engage in extensive efforts to assist industry in complying with new rules, both before and after they become effective. Based on those outreach efforts, and the comments received in response to our proposal to delay the prepaid accounts rule’s effective date, we have determined that we should revisit at least two substantive issues through a separate notice and comment rulemaking process. Those two issues relate to:

The linking of credit cards to digital wallets that are capable of storing funds

Error resolution and limitations on liability for prepaid accounts that cannot be registered, have not yet been registered, or for which consumers have attempted but have not successfully completed the registration process

We are continuing to evaluate other concerns raised by industry and other stakeholders and may address a limited number of other topics in the proposal as well. We also will seek comment on whether any further extension of the effective date is needed in light of the specific changes that we propose.

The CFPB is committed to well-tailored and effective regulations and aims to carefully craft our efforts to ensure consistency in consumer financial protections across the financial services marketplace.